The incoming chief of Balfour Beatty has told the Wall Street Journal that no options will be off-limits when he joins the 106-year-old, £10bn turnover construction company on 1 January.
Leo Quinn, the well-regarded chief executive of MOD-spin off defence and technology business QinetiQ, this week told the WSJ: “Nothing can be sacrosanct in a situation where you’ve got to restore a business to strength.”
In the WSJ interview, Quinn said the decision to quit QinetiQ was partly driven by fondness for Balfour Beatty, where he began his career as an engineer in 1979. “There was a bit of nostalgia there,” he said.
And he also raised the possibility of Balfour and Qinetiq doing business, saying: “I’m sure there will be opportunities for the two companies to work together.”
KPMG was appointed nearly three weeks ago to review all the contracts in the Balfour Beatty Construction Services UK portfolio, following three profit warnings in five months, amounting to £140m in total.
“I honestly don’t yet know what my analysis of the business will show, and I don’t want to leap to any conclusions. What I am sure of is that I can do our company, our customers and all of you proud, and I will share all plans with you as soon as they are formed.”
Leo Quinn
The firm is due to complete the review before Quinn takes up his post, and he commented that “one would like to think a line is drawn under it, but we don’t really know”.
QinetiQ is known for defence and aerospace equipment, including drones, robots, hi-tech detection equipment and even the thrusters that will propel a European space mission to Mercury, although its services also include software engineering, training and simulation. Its latest results to March 31 show a pre-tax profit of £119m on a turn-over of £1.19bn.
Quinn took up the chief executive role there in late 2009, following two profit warnings and a £66m loss for the year to 2010 at the 9,000-strong business. He implemented a two-year strategy to transform the company into a more customer-focused, commercial organisation while cutting debt, costs and reducing headcount – according to The Telegraph, he cut 15% of UK staff. This transformation also involved selling its US services arm.
At Balfour Beatty, Quinn will now have to map the way forward for a company that has taken repeated knocks to its self-confidence and is trading at just half the value it held six months ago. The share price yesterday closed at 159p, giving a market capitalisation of £1.08 bn. In March, prior to the latest trio of profit warnings, its shares reached a high of 322p.
But in a letter to 40,000 worldwide staff, Quinn wrote confidently about the task ahead. “Once I join, we will begin developing a clear way forward together. I honestly don’t yet know what my analysis of the business will show, and I don’t want to leap to any conclusions. What I am sure of is that I can do our company, our customers and all of you proud, and I will share all plans with you as soon as they are formed.”
He urged staff to be equally open in their dealings with him, not to spend too much time “looking over their shoulders”, and also to “embrace simplicity”.
He concluded with a rhetorical flourish: “My commitment to you is this: I will restore Balfour Beatty to its rightful place on the global stage and do this company of people proud.”
